Following is the text of the U.S. manufacturing conditions from the Institute for Supply Management.
PMI at 50.9%; June Manufacturing ISM Report On Business; New Orders,
Production and Inventories Growing; Employment Contracting; Supplier

Deliveries Unchanged

DO NOT CONFUSE THIS NATIONAL REPORT with the various regional purchasing reports released across the country. The national report’s information reflects the entire United States, while the regional reports contain primarily regional data from their local vicinities. Also, the information in the regional reports is not used in calculating the results of the national report. The information compiled in this report is for the month of June 2013.
Economic activity in the manufacturing sector expanded in June following one month of contraction, and the overall economy grew for the 49th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM Report On Business.
The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management Manufacturing Business Survey Committee. “The PMI registered 50.9 percent, an increase of 1.9 percentage points from May’s reading of 49 percent, indicating expansion in the manufacturing sector for the fifth time in the first six months of 2013.
The New Orders Index increased in June by 3.1 percentage points to 51.9 percent, and the Production Index increased by 4.8 percentage points to 53.4 percent. The Employment Index registered 48.7 percent, a decrease of 1.4 percentage points compared to May’s reading of 50.1 percent. Manufacturing employment contracted for the first time since September 2009, when the index registered 47.8 percent. The Prices Index registered 52.5 percent, increasing 3 percentage points from May, indicating that overall raw materials prices increased from last month. Comments from the panel generally indicate slow growth and improving business conditions.”
Of the 18 manufacturing industries, 12 are reporting growth in June in the following order: Furniture & Related Products; Apparel, Leather & Allied Products; Paper Products; Electrical Equipment, Appliances & Components; Petroleum & Coal Products; Wood Products; Food, Beverage & Tobacco Products; Primary Metals; Fabricated Metal Products; Plastics & Rubber Products; Machinery; and Nonmetallic Mineral Products.
The four industries reporting contraction in June are: Textile Mills; Transportation Equipment; Chemical Products; and Computer & Electronic Products.

WHAT RESPONDENTS ARE SAYING

“Business remains good to improving.” (Miscellaneous Manufacturing) “Industry volumes picking up with improved housing starts.” (Electrical Equipment, Appliances & Components) “Indications are that customers have acceptable inventory levels, and as a result, are backing down on new orders and reassessing market conditions.” (Wood Products) “Last couple of weeks a little slower.” (Furniture & Related Products) “Seeing signs of life through summer retail [sales] promotions -- still an overall soft market.” (Food, Beverage & Tobacco Products) “Business is steady. Qualified CNC machinists are hard to find.” (Fabricated Metal Products) “Weather conditions are causing uncertainty in agricultural markets.” (Machinery) “Continued slow improvements.” (Transportation Equipment) “June sales appear to have rebounded from what was a lackluster May.” (Paper Products) “Slow growth continues to choke the recovery. We are not out of the woods yet by any stretch of the imagination.” (Chemical Products)
MANUFACTURING AT A GLANCE COMMODITIES REPORTED UP/DOWN IN PRICE and IN SHORT SUPPLY
Commodities Up in Price Aluminum Products; Caustic Soda (3); Corrugated Boxes (11); Corrugated Packaging (2); Lumber (6); Plastic Products; Plywood; and Polypropylene*.
Commodities Down in Price Butter; Hydraulic Components; Polypropylene (2)*; Stainless Steel (2); Steel (3); Steel -- Cold Rolled; Steel -- Hot Rolled (2); and Sugar (2).

Commodities in Short Supply

No commodities are reported in short supply.
Note: The number of consecutive months the commodity is listed is indicated after each item.
*Reported as both up and down in price.

JUNE 2013 MANUFACTURING INDEX SUMMARIES

PMI Manufacturing expanded in June as the PMI registered 50.9 percent, an increase of 1.9 percentage points when compared to May’s reading of 49 percent. June’s reading of 50.9 percent reflects the resumption of growth in the manufacturing sector for 2013, following the only month of contraction for the year in May. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.
A PMI in excess of 42.2 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the June PMI indicates growth for the 49th consecutive month in the overall economy, and indicates expansion in the manufacturing sector following one month of contraction. Holcomb stated, “The past relationship between the PMI and the overall economy indicates that the average PMI for January through June (51.5 percent) corresponds to a 2.9 percent increase in real gross domestic product (GDP) on an annualized basis. In addition, if the PMI for June (50.9 percent) is annualized, it corresponds to a 2.7 percent increase in real GDP annually.”

New Orders

ISM’s New Orders Index registered 51.9 percent in June, an increase of 3.1 percentage points when compared to the May reading of 48.8 percent. This represents growth in new orders after one month of contraction. A New Orders Index above 52.2 percent, over time, is generally consistent with an increase in the Census Bureau’s series on manufacturing orders (in constant 2000 dollars).
The 11 industries reporting growth in new orders in June -- listed in order -- are: Apparel, Leather & Allied Products; Paper Products; Furniture & Related Products; Primary Metals; Food, Beverage & Tobacco Products; Petroleum & Coal Products; Plastics & Rubber Products; Machinery; Electrical Equipment, Appliances & Components; Fabricated Metal Products; and Miscellaneous Manufacturing.
The five industries reporting a decrease in new orders during June are: Wood Products; Transportation Equipment; Chemical Products; Computer & Electronic Products; and Nonmetallic Mineral Products.

Production

ISM’s Production Index registered 53.4 percent in June, which is an increase of 4.8 percentage points when compared to the 48.6 percent reported in May. This month’s reading indicates growth in production and follows the only month of contraction in production for the year.
An index above 51.2 percent, over time, is generally consistent with an increase in the Federal Reserve Board’s Industrial Production figures.
The 11 industries reporting growth in production during the month of June -- listed in order -- are: Apparel, Leather & Allied Products; Electrical Equipment, Appliances & Components; Furniture & Related Products; Paper Products; Nonmetallic Mineral Products; Wood Products; Fabricated Metal Products; Primary Metals; Petroleum & Coal Products; Food, Beverage & Tobacco Products; and Computer & Electronic Products.
The three industries reporting a decrease in production in June are: Chemical Products; Machinery; and Transportation Equipment.

Employment

ISM’s Employment Index registered 48.7 percent in June, which is 1.4 percentage points lower than the 50.1 percent reported in May. This month’s reading indicates contraction in employment for the first time since September 2009, when the index registered 47.8 percent. An Employment Index above 50.5 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.
Of the 18 manufacturing industries, eight reported growth in employment in June in the following order: Wood Products; Furniture & Related Products; Paper Products; Plastics & Rubber Products; Electrical Equipment, Appliances & Components; Primary Metals; Machinery; and Food, Beverage & Tobacco Products.
The five industries reporting a decrease in employment in June are: Textile Mills; Computer & Electronic Products; Transportation Equipment; Fabricated Metal Products; and Chemical Products.

Supplier Deliveries

The delivery performance of suppliers to manufacturing organizations in June was unchanged from May as the Supplier Deliveries Index registered 50 percent. This month’s reading is 1.3 percentage points higher than the 48.7 percent reported in May. A reading below 50 percent indicates faster deliveries, while a reading above 50 percent indicates slower deliveries.
The six industries reporting slower supplier deliveries in June -- listed in order -- are: Petroleum & Coal Products; Furniture & Related Products; Fabricated Metal Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; and Chemical Products.
The four industries reporting faster supplier deliveries in June are: Primary Metals; Electrical Equipment, Appliances & Components; Transportation Equipment; and Paper Products. Eight industries reported no change in supplier deliveries in June compared to May.
Inventories*
The Inventories Index registered 50.5 percent in June, which is 1.5 percentage points higher than the 49 percent reported in May. This month’s reading indicates that respondents are reporting inventories expanded in June, following three consecutive months of contraction.
For the current year, inventories of raw materials have registered in a well-managed range from a high of 51.5 percent in February to a low of 46.5 percent in April. An Inventories Index greater than 42.7 percent, over time, is generally consistent with expansion in the Bureau of Economic Analysis’ (BEA) figures on overall manufacturing inventories (in chained 2000 dollars).
The seven industries reporting higher inventories in June - - listed in order -- are: Apparel, Leather & Allied Products; Electrical Equipment, Appliances & Components; Primary Metals; Petroleum & Coal Products; Food, Beverage & Tobacco Products; Fabricated Metal Products; and Machinery. The six industries reporting decreases in inventories in June -- listed in order -- are: Textile Mills; Miscellaneous Manufacturing; Plastics & Rubber Products; Chemical Products; Transportation Equipment; and Wood Products.
Customers’ Inventories*
The ISM Customers’ Inventories Index registered 45 percent in June, which is 1 percentage point lower than in May when the index registered 46 percent. This month’s reading indicates that customers’ inventories are considered too low, and lower than reported in May.
Customers’ inventories have registered at or below 50 percent for 51 consecutive months. A reading below 50 percent indicates customers’ inventories are considered too low.
The four manufacturing industries reporting customers’ inventories as being too high during the month of June are: Apparel, Leather & Allied Products; Primary Metals; Chemical Products; and Food, Beverage & Tobacco Products. The nine industries reporting customers’ inventories as too low during June -- listed in order -- are: Plastics & Rubber Products; Furniture & Related Products; Machinery; Petroleum & Coal Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Fabricated Metal Products; Paper Products; and Computer & Electronic Products.
Prices*
The ISM Prices Index registered 52.5 percent in June, which is an increase of 3 percentage points compared to the May reading of 49.5 percent. This indicates that raw materials prices increased in June, following only one month of price decreases for the year in May. In June, 20 percent of respondents reported paying higher prices, 15 percent reported paying lower prices, and 65 percent of supply executives reported paying the same prices as in May. A Prices Index above 49.7 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) Index of Manufacturers Prices.
Of the 18 manufacturing industries, nine reported paying increased prices during the month of June in the following order: Textile Mills; Furniture & Related Products; Nonmetallic Mineral Products; Miscellaneous Manufacturing; Paper Products; Plastics & Rubber Products; Primary Metals; Food, Beverage & Tobacco Products; and Computer & Electronic Products.
The five industries reporting paying lower prices during June are: Petroleum & Coal Products; Wood Products; Electrical Equipment, Appliances & Components; Machinery; and Fabricated Metal Products.
Backlog of Orders*
ISM’s Backlog of Orders Index registered 46.5 percent in June, which is 1.5 percentage points lower than the 48 percent reported in May. This is the second month of contracting order backlogs since January 2013, when the index registered 47.5 percent. Of the 84 percent of respondents who reported their backlog of orders, 17 percent reported greater backlogs, 24 percent reported smaller backlogs, and 59 percent reported no change from May.
The five industries reporting increased order backlogs in June are: Apparel, Leather & Allied Products; Petroleum & Coal Products; Electrical Equipment, Appliances & Components; Furniture & Related Products; and Machinery. The seven industries reporting decreases in order backlogs during June -- listed in order -- are: Primary Metals; Textile Mills; Transportation Equipment; Chemical Products; Food, Beverage & Tobacco Products; Computer & Electronic Products; and Wood Products.
New Export Orders*
ISM’s New Export Orders Index registered 54.5 percent in June, which is 3.5 percentage points higher than the 51 percent reported in May. This month’s reading represents the seventh consecutive month of growth in new export orders, and follows six consecutive months of contraction dating back to June 2012.
The seven industries reporting growth in new export orders in June -- listed in order -- are: Primary Metals; Furniture & Related Products; Paper Products; Miscellaneous Manufacturing; Fabricated Metal Products; Machinery; and Transportation Equipment.
The two industries reporting a decrease in new export orders during June are: Food, Beverage & Tobacco Products; and Chemical Products. Eight industries reported no change in new export orders in June compared to May.
Imports*
ISM’s Imports Index registered 56 percent in June, which is 1.5 percentage points higher than the 54.5 percent reported in May. This month’s reading represents the seventh consecutive month that the Imports Index has registered at or above 50 percent.
The 10 industries reporting growth in imports during the month of June -- listed in order -- are: Wood Products; Primary Metals; Fabricated Metal Products; Miscellaneous Manufacturing; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Plastics & Rubber Products; Machinery; Food, Beverage & Tobacco Products; and Furniture & Related Products. The two industries reporting a decrease in imports during June are: Nonmetallic Mineral Products; and Apparel, Leather & Allied Products.
Six industries reported no change in imports in June compared to May.
* The Inventories, Customers’ Inventories, Prices, Backlog of Orders, New Export Orders and Imports Indexes do not meet the accepted criteria for seasonal adjustments.
Buying Policy Average commitment lead time for Capital Expenditures remained unchanged at 125 days. Average lead time for Production Materials decreased 2 days to 60 days. Average lead time for Maintenance, Repair and Operating (MRO) Supplies decreased 1 day to 25 days.
The next Manufacturing ISM Report On Business featuring the July 2013 data will be released at 10:00 a.m. (ET) on Thursday, August 1, 2013.
SOURCE: Institute for Supply Management http://www.ism.ws